Hoping for advice on which debt plan is right for me?

Grumpelstiltskin

OK Forget the fact that Stepchange have told you your breathing space is finishing.

Do you think you could manage a DMP yourself?

If so you need to cut back n everything you can, moving back to parents? save an emergency fund and wait until everything defaults. By the time you have the defaults you will know what your financial position is.

Ignore any communication from creditors by phone, text or E Mail but open any letters.

If you do move keep creditors up to date on your new address or get post redirection.

oatsinthewater21

@stu12345_2 My parents have been very kind and said they will cover all household expenses and only ask for a small amount towards the food shop, so they can still cook family meals but have some money towards buying 2x packets of chicken rather than 1x etc which would overall still make living costs cheaper in the long run.

Thank you, a DMP is looking more and more appealing for my situation. My worst nightmare would be to take an option that would leave me unable to rent anywhere in the future as I'm finding that difficult enough already with a small cat, so a DMP seems to work best in that regard. Would a self managed DMP be able to work the same as the snowball method? I have some small debts around £125 - £400 and larger ones around £5,900. I'd like to prioritise paying off the smaller ones first if possible as it would give me less people to work with in the long run and more money to put into paying off the bigger debts. Would I be able to pay a lower monthly amount to the big debts and a higher monthly amount to the small ones without it seeming like favouring one debt over another?

All the household bills are in the name of my housemate downstairs, I just pay her 1/2 of the cost each month. She will be staying on in the property, so once the tenancy ends I don't have any ties to the household bills.

The fridge, sofa etc belong to my parents so I couldn't sell them, but they have said I can use them when I move out until I can afford to buy my own in that makes sense? The rest of the container is just filled with sentimental items or things I have no space for in a double room but would have space for when I move out. I have had a clear out of things I don't need/don't use in the past etc to try and pay off these debts before so what I have left is really the bare minimum. But I will 100% look into a council lock up to cut costs, as I don't use half the room in the storage container so it is beginning to be a waste of money.

My parents live an hour and a half away from me, so ideally I'd need to move jobs as the travel expenses would significantly increase. I current work as an Office Admin, so I wonder how easy/difficult it would be to look for a work from home job over the next 8 months until my tenancy ends so that would cut travel expenses even more...

I completely agree, before I started renting privately in August 2023 I was able to keep my head above water. But shortly after I realised how much of a negative impact it had on my outgoings (unfortunately at that point in time due to a relationship breakdown I had no choice but to rent privately as my parents lived abroad and I had no where else to go!)

oatsinthewater21

stu12345_2 said:

you can have £2000 in savings in a dro and as much savings as you want in a dmp

standard advice is pay nothing until you have built up an emergency fund and all your debts have defaulted, then begin a dmp

do it by yourself or via a charity( but debt charity will want you to pay now it wont wait for all defaults or wait till you have saved a good emergency fund), but don't start one until those 2 things have happened 

a charity will want proof of your earnings, but if you do your own dmp, you never have to prove anything no matter how often the creditors say or demand.

you get their sort code and account number from the back of any letters they sent you and you set up a monthly amount via your bank and put your debt reference number in your payment.

give a decent enough time for all your debts to default say 6 months, then consider paying some money prorata to the defaulted debts, but not the non defaulted ones yet.
and only pay enough, so that you have enough to pay the others when they default 

do you have any debts with your current bank

step change suggest a dro cos  a dmp will be far too long if you continue renting private etc , you have not enough left over to service a decent quickish dmp

so they say a dro, but you rent private, that will hit your credit file hard and bad,  and you say your wages will go up

step change have ran out of solutions, hence we say don't pay until defaults, get emergency fund built up, then move  back in with folks, if defaults happened or happen before you move back in with parents, pay the defaulted ones very little imo

It's crazy how much gets twisted in the pipeline during these situations, I was told the complete opposite about the savings and though that was ridiculous. Thank you so much for the insight, I'm very grateful for this info just before payday so I will be putting away a big chunk of my wages for an emergency fund.

Thank you. As 2x of my debts have already defaulted, will I be able to wait 6 months before paying any money to them to save up an emergency fund or will they take further action in that time?

I have a Natwest, Lloyds and a Santander bank account. I don't have any debts directly with them but I'm unsure if they are related to any of my creditors (Reevo, Zopa, Barclaycard, Aqua).

Thank you again!

oatsinthewater21

Grumpelstiltskin said:

OK Forget the fact that Stepchange have told you your breathing space is finishing.

Do you think you could manage a DMP yourself?

If so you need to cut back n everything you can, moving back to parents? save an emergency fund and wait until everything defaults. By the time you have the defaults you will know what your financial position is.

Ignore any communication from creditors by phone, text or E Mail but open any letters.

If you do move keep creditors up to date on your new address or get post redirection.

With the correct information on board to answer anything the creditors throw at me, I do think I could manage a DMP myself. I just want to be sure I don't miss anything that will land me in more trouble haha

Thank you, I am going to knuckle down on my budget tonight and get as much saved as possible.

Do I need to tell my creditors anything once my Breathing Space ends? Or will they just default naturally if I ignore all other communication?

Do I need to do anything now about the 2x debts that have already defaulted?  

Thank you for your help!

stu12345_2

don't do debt snowball, you do debts prorata based in the balances compared to each other, and as they have defaulted no interest can be added at that point ever.

snow ball works if they are charging high interest, you hit the highest rate first.
but that's for folk that can manage the min payments  and don't want a dmp

and you can rent containers half sizes, just sell any rubbish in them, be ruthless or stack the small stuff ontop of the couch, etc, fill that space.

council lockups are advertised on council website, I admit they are rare.

Grumpelstiltskin

Don't tell your creditors anything, under no circumstances phone them they will only try to get you to pay them.

Just don't panic whatever they threaten unless you get a letter before action sent by snail mail, that is why you need you let them have your current address. That possibility is way down the line and might not even happen so at the moment get as much money together in an emergency fund and keep coming back on here for further advice.

oatsinthewater21

stu12345_2 said:

don't do debt snowball, you do debts prorata based in the balances compared to each other, and as they have defaulted no interest can be added at that point ever.

snow ball works if they are charging high interest, you hit the highest rate first.
but that's for folk that can manage the min payments  and don't want a dmp

and you can rent containers half sizes, just sell any rubbish in them, be ruthless or stack the small stuff ontop of the couch, etc, fill that space.

council lockups are advertised on council website, I admit they are rare.

Ah I see, thank you!

So I wouldn't pay them all the same set amount each month, but instead pay each individual debt a different figure in line with the balance of the individual debt prorata?

Yes very very true! I'll look into that today of smaller containers, I think that will 100% help as I feel I'm wasting money with a huge shipping container that is barely half full.

oatsinthewater21

Grumpelstiltskin said:

Don't tell your creditors anything, under no circumstances phone them they will only try to get you to pay them.

Just don't panic whatever they threaten unless you get a letter before action sent by snail mail, that is why you need you let them have your current address. That possibility is way down the line and might not even happen so at the moment get as much money together in an emergency fund and keep coming back on here for further advice.

Thank you so so much!

So plan is:

• Re-evaluate budget and cut costs wherever possible 
• Save emergency fund until all debts have defaulted
  
• Ignore all calls/texts/emails from creditors but open and keep all letters
  
• Don't pay a penny to any creditors until all debts have defaulted and have no contact with them (unless before action letter is sent if this even happens)
  
• Come back regularly for more advice and to update on my situation

Is this right?

Grumpelstiltskin

oatsinthewater21 said:

Grumpelstiltskin said:

Don't tell your creditors anything, under no circumstances phone them they will only try to get you to pay them.

Just don't panic whatever they threaten unless you get a letter before action sent by snail mail, that is why you need you let them have your current address. That possibility is way down the line and might not even happen so at the moment get as much money together in an emergency fund and keep coming back on here for further advice.

Thank you so so much!

So plan is:

• Re-evaluate budget and cut costs wherever possible 
• Save emergency fund until all debts have defaulted
  
• Ignore all calls/texts/emails from creditors but open and keep all letters
  
• Don't pay a penny to any creditors until all debts have defaulted and have no contact with them (unless before action letter is sent if this even happens)
  
• Come back regularly for more advice and to update on my situation

Is this right?

Pretty much, with the defaults some will happen quicker than others, you have the choice to pay something to the defaulted ones then if you want, remember from now you are in control not your creditors, you do what suits you not them.

Just keep coming back for advice at any time we won't say you are posting too much as it can be daunting at the beginning.

oatsinthewater21

@Grumpelstiltskin Thank you so much for your help, for the first time in nearly a year I'm feeling pretty positive about all of this! I'll be back with an update for advice when I get to the next step